The Greens have launched their manifesto today, competing manfully for media space alongside the other big #sp11 news today – that of the Sun’s backing for the SNP. It is a shame to see the launch as the 5th biggest story in Scotland today (The Sun/SNP endorsement is 2nd). Did the Nats deliberately stymie the Green launch by having both announcements on the same day? Let’s be honest, touché if so. All’s fair in love, war and election campaigns.
So, what are we being offered from the Greens then? Well, quite a lot actually:
– a Land Value Tax (as previously discussed several times on this blog so no need to rehash)
– scrap the additional Forth Road Bridge and Aberdeen bypass, saving £1.8bn for public spending
– 0.5p added to the Scottish Variable Rate from 2013, raising £200m+ a year
– A stronger budget focus on transport, affordable housing, free education and an insulation programme
– Commitment to large scale ecosystem restoration projects
It is the detail of the tartan tax policy that has really floated by wave turbine though. Someone earning £20k a year will pay £1.20/week more in income tax, someone earning £45k a year will pay £3.60/week more. Potentially provocative, yes, but also proactive and progressive. There can be no easy solutions when you’re budget is set to be slashed by 12.5%, even if other parties seem to think there is.
No-one wants to pay more tax, particularly when, as before, there is no figure applied to that warning and the imagination is free to picture cash slipping away. However, we now have a figure to focus on and £1.20 – £3.60 per week is about the equivalent of a pint. Would you buy a pint for the unemployed? For the poverty-stricken? For the students? For the senior citizens? The upsides arguably indirectly extend to lower crime, better health and higher education standards too. I don’t know how we can shirk our duty not to do this.
We are after all already missing important opportunities. Tesco has just announced multi-billion quarterly profits (the shopping giant makes £10m profit a day) but the Scottish Parliament (Lab/LD/Con) still wimped out of making such large businesses contribute a little bit more to the tax intake. The debate over tuition fees has been miserably disingenuous; the average fees in England are not at around £8,700 but Scottish parties are still claiming that the funding shortfall will be £90m a year (a figure based on average English fees at ~£7,000).
We aren’t really any further forward with properly insulating our homes either, an investment that would save families money through power bills which, in turn, frees up money for the family purse and Council Tax rises etc. The Greens had a substantial budget proposal on the table a couple of years ago but politics got in the way once again and the SNP rebuffed the offer. Claim and counter-claim ensued but that doesn’t change the fact that it would take 200 years to insulate the nation. Not good enough. How can we pass up win-win-win opportunities like this? There must be a way, a political will to get this done. Indeed, the big issue of this election so far is the Council Tax freeze but what would save people more money, better insulation or no rises in Council Tax? Worth exploring I reckon.
The use of the SvR is the big one for me though and, those who can pay, paying a bit more those who can’t. It’s not a big sacrifice to make and it starts way off in 2013 (assuming the coalition follows through with its intention of more, deeper cuts). I am glad that one of the political parties had the guts to put this revenue-raising option to the people, it is a policy that goes right to the heart of the kind of nation that I certainly want Scotland to be more like so let’s see how Scots take to it.
Oh, and the Greens are in favour of independence too.
#1 by Douglas McLellan on April 19, 2011 - 2:39 pm
Good post Jeff
As you said the LVT has been covered several times but it was telling that Patrick Harvie on the Scotsman website live chat yesterday didnt seem to realise the impact the the LVT would have on students and ignored the woman who lives in a more expensive property so she can walk to work. And today on twitter the official SGP tweet advised me that those organisations that get an exemption from business rates (charities) will now pay a fair rate based on the value of their land. It is clear that there are some mighty, and potentially damaging to the vulnerable, holes in the LVT policy.
That said, I am keen on it for commercial land and see it as a useful way to raise additional funds and more importantly, improve land use.
Given the stushie that was raised by the Greens over the rise in VAT the increase in income tax it is a bit weird they are asking someone who is earning £7475 to pay more in income tax.
And until public sector spending is under control and there is far less repetition and waste in the system then why should I pay more tax? My cost of living is going up and I spend more than I need to on things like groceries & clothes etc as I support and use local shops etc.
Especially as the Greens want to spend money providing home improvements and retain free medicines for people who earn far more than I do. I can see why the SGP wants to change the current insulation programme but we can also do more to ensure that rich people dont benefit from tax rises on those earning £7,475 (use provisions in Housing Act 2006).
My flat is as insulated as it can be (maybe some work on a draft from one window) so the CT Freeze is better for me than insulation and when I move to a new flat in September, even more so.
In the SGP own proposals, over the course of the parliament there would be a drop of £2bn in money available to spend. They would then have to then cut something somewhere.
I cant find the Tories workings in their manifesto (link to a separate doc please if anyone has it) but are they also working on the £90m? Agree that figure is too low. Disagree that people earning £7,475 should pay the fees of students.
The SVR is not the only revenue raising idea though. LVT is there as well without any exemptions for anyone.
#2 by Jeff on April 19, 2011 - 7:37 pm
Thanks Douglas, good comment.
Yeah, I’m a bit behind the curve on this ‘students, OAPs, unemployed are worse off under LVT’ so can’t comment. I will later though after doing some reading!
I’m not sure I agree with your comment that those paying £7,475 will pay extra income tax. Didn’t the coalition just raise the threshold to £10,000? And someone earning £10,001 would pay an extra 0.5p/year. Someone earning £14,000/year would pay an extra £20/yr so let’s not get carried away with this being a tax on the poor.
The whole point of the tax is to save jobs so, even if there is a bit of hidden waste in the system, I think the ‘why should I pay more of my hard-earned cash?’ question will be easily answered when the cuts really bite and jobs are falling fast.
Maybe the other parties can wave a magic wand, but I don’t see how the spending circle can be squared and I’m with Iain Rankin who is tired of spending commitments that don’t add up.
Since you quote it thrice, where does the £7,475 figure come from? Me and my tax books are waiting in anticipation… 😉
#3 by Aidan Skinner on April 19, 2011 - 9:32 pm
The income tax threshold for 2011/2012 is £7475, up from £6475 in 2010/2011. The coalition has a policy to raise it to £10,000 by 2015: http://www.hmrc.gov.uk/rates/it.htm
Raising the basic rate of income tax is regressive, particularly to those on fixed incomes.
#4 by Douglas McLellan on April 19, 2011 - 10:14 pm
It’s a progressive journey to the Lib Dem target of £10,000 so it was raised by £1,000 to the current allowance of £7,475 – http://bit.ly/aGr4p
The problem is that I feel I am supporting local jobs by using more expensive local shops, craft shops and local cafes as opposed to multinational supermarkets and fast food chains. I live payday to payday so if my taxes go up then that does mean less money in my local community.
I am willing to pay more tax if councils and the NHS were struggling to meet their legal/statutory obligations. Given the £20bn+ that the public sector gets in Scotland I want to see how much money is really needed and why before I am happy to pay more taxes.
#5 by Jeff on April 20, 2011 - 12:00 am
OK, hands up, I’ve been caught out living in the past, I forgot the lower 10% rate of tax has been scrapped and thought, mistakenly, that you had stumbled into my elephant trap (I must be getting on cos my accountancy exams were based on that fundamental!)
I still think it’s misleading to say that the Greens are planning to tax people on £7,475 though – (1) the Greens pledge to bring this in during 2013, that’s two tax years away and the personal allowance will increase over that time, closer to £10k if not all the way there and (2) even if this 0.5% tax was levied now, a person earning £7,475 would pay no tax, as that would be their personal allowance used up.
A taxpayer only pays £2.50 for every extra £500 they earn a year. So, for me, it’s not enough to say ‘it’s a tax on the poor, it must be dismissed’. It’s one very useful lever that can offset the worst of the cuts. Other levers include those that you mention about choosing where we shop (something that I wish more of the party leaders would urge!) and, if you are living payday to payday, I would argue that you would be paying an insignifcant amount of extra tax each month to an extent that it simply woudn’t be a factor…
Of course it’s a trade-off, it all is, but both sides of the coin need to be considered for a fair debate and I don’t think waiting for the NHS/Councils to reach breaking point before asking people to pay an extra ha’penny to save jobs/services is the way to go either.
Anyway, I guess this is the agree to disagree stage, hey…?
#6 by Douglas McLellan on April 20, 2011 - 1:26 am
Yeah I know that there the amount in tax being paid by those earning just above the threshold will be minimal but I feel that if the VAT rise was to be criticised for its impact (and the SGP were critical) then its only fair that their own proposed tax rise on low earners should be subject to the same criticism.
I pay £375 per month in tax and £213.29 in NI so I probably need an IFA.
And yes, I have to agree to disagree that throwing good money (the£200m) after what appears to be bad money (£20bn) is where I have to ask what are we really spending all this money on. If we want to offset the cuts it is looking at what we spend money on and why? It amazes me that there is this assumption that every council penny is correctly spent.
Not that I blame the government (local or national) for some of the stupid spending. The outcry every time and under-used school is threatened with closure is remarkable. And its remarkably expensive to keep them but thats people power.
#7 by steve on April 19, 2011 - 2:48 pm
If we can put up basic rate income tax in 2013 then we could introduce a local income tax by then, and either spread the increase across basic AND higher rate tax payers, or even just put it on higher rate tax payers.
Unfortunately the SVR is on basic rate only, so it will cost £3.60 if you earn £45k, and £3.60 if you earn £450k.
#8 by Douglas McLellan on April 19, 2011 - 3:05 pm
I endorse this comment.
I blogged way last year about wanting a LIT/LVT combo.
#9 by Jeff on April 19, 2011 - 7:39 pm
LIT isn’t happening Steve, it isn’t in enough manifestos (any?). It’s either Council Tax or Land Value Tax until 2016 I’m afraid.
#10 by steve on April 19, 2011 - 9:36 pm
I really don’t get this LVT is the only game in town argument. Only the greens favour LVT, the SNP and Lib Dems and SSP all favour LIT. In all probability we’ll be stuck with council tax 5 years from now, but LIT is at least as likely a contender as LVT in my opinion.
But in reality, the best hope for any positive change to local tax will be forced on us and is in nobody’s manifesto. That’s when council tax benefit gets devolved in 2013. At the moment some people pay 10 or even 15 percent of their incomes on council tax. We could take the money earmarked for the freeze and use it to make sure no-one pays more than they can reasonably afford on council tax. We could use the svr to help fund this if we wanted.
Anyway, my point is there will be options, choices, and decisions to influence post 5 May, and we can’t predict exactly how that will play out.
#11 by CassiusClaymore on April 19, 2011 - 9:05 pm
Can’t believe the Greens’ tax proposals. Taxing the poor more? It’s a tax cut they need. Why steal their money to fund our bloated and ineffectual public sector? Quite unbelievable.
To respond to Jeff’s point, there is no scope for LVT prior to 2016 due to the incomplete nature of the Land Register. It is laughable to say that Land Registration can be accelerated so as to be completed by 2012, as Patrick Harvie said in the BBC economy debate. If my house is on the Register of Sasines, and I never sell it, then it will not be on the LR until it is transferred after my death. It’s not about the amount of resource at the LR – it’s about the triggers for first (land) registration. They started in 1979 and we’ve got to 60% coverage….enough said.
Anyway, residential LVT will simply lead to the following:-
1. Suburban citizen has large garden. Not unusual.
2. Cash-strapped council, struggling to fund all their pointless social engineering and related non-jobs, give him planning consent to build another house in the garden, without him asking, to drive a higher valuation of his property and thus raise their LVT revenues.
3. Citizen, faced with doubled LVT bill (probably 6-8 times as much as his old council tax, if he lives in an Edinburgh suburb) gives in, builds a house and sells it off.
Lo and behold, less green space and more urbanisation. Is this what the Greens really want?
Finally, the example of Central Park cited in Andy Wightman’s report is surely an example of tax increment financing (TIF) rather than LVT?
CC
#12 by cynicalHighlander on April 19, 2011 - 9:41 pm
Any extra tax raised will automatically be taken off the block grant that’s a certainty when will the Greens and LibDems wake up to that. Any tax raising powers will not be available until after 2016 and the damaging Calman stitch up comes into play. That 10 grand limit raising is in stages Jeff so inflation will wipe out any benefit and more by the time that threshold is reached. Playing around with tax unless FFA is implimented is waisting time.
#13 by steve on April 19, 2011 - 9:41 pm
PS current level of personal allowance is 7475, see hmrc.gov.uk/incometax/personal-allow.htm.
10k is the Target, not sure when we’ll get there.
#14 by John Ruddy on April 19, 2011 - 11:30 pm
There is much here that the traditional left wing voter can find appealing. A land value tax must surely be the long term aim for a fair system of local government finance, but like others I am unconvinced that it can be delivered in the timescales suggested.
Scrap Forth Road bridge? Yep, ticks my box, though probably not that of my Fife Labour colleagues. Cancel AWPR? Yes again. But likewise not going to win too many votes up here.
Transport, affordable housing, insulation – all good stuff too.
I think the Greens are doing a great job at being the conscience of the Scottish Parliament, and having more than 2 MSPs will help that. But how realistic it is to achieve all these things is a different question. I dont think they will get the capital project cancellations from either main party, but the smaller stuff might be achievable. The tax changes wont happen.
My personal reform? Add more bands to council tax to make it more progressive, reducing the amount that band a & b properties are charged, helping the less well off.
#15 by Marco Biagi on April 20, 2011 - 7:35 am
The Greens have never once had a “substantial budget proposal” about home insulation, they have only had a budget *demand*. It was £100m with no proposed corresponding reduction elsewhere. And an accountant like yourself knows cutting road-building, the old and oversold favorite, wouldn’t have provided it because of the barriers between capital and revenue spending.
The reason the 200 year figure is there isn’t because of the scale of what the SNP government has been offering, but the disappointing take-up. We’ve offered insulation already to just shy of 500,000 homes – about a fifth of the country.
Oh, and the Scotland Act (the last one) allows HMRC to charge any administrative costs to the SG for the use of SVR. The last estimate I saw was something like £100-200m in the first year falling to £30-50m thereafter. That may have been back of a fag packet stuff in a newspaper, but it suggests to me that the first real beneficiaries of the 0.5% rise would be civil servants in Whitehall.
#16 by Gryff on April 20, 2011 - 10:09 am
Is the problem that we are being expected to make our vote, partially on the basis of tax policies, without anyone providing any clarity in terms of what they mean.
LDs, would prepare the ground over the next five years, which at least means the 10k rate and devolution for Ct benefit have time to take effect and be integrated into proposals for 2016. I would hope they would set civil servants on working the details out immeadietly, and produce a fully worked out proposal in time for the election. (Hope operative word here). The same would apply to the SNPs proposals, but then this gives rise to the question – why vote now for something due to happen outside this term? What exactly will be done to prepare the ground?
Greens would introduce a system of LVT very quickly indeed, so quickly in fact that they may be scaring off some of those who might be sympathetic. Do we know how the register will be up dated in time? Do we know if there will be any transitionary arrangements for e.g. students, the elderly, charities, small business etc. Do we know just how it would effect each group, how it would be introduced, and what arrangements will be put in place in terms of CT benefit.
Finally any proposals on LIT, LVT or for the SVR are dependent on massive assumptions regarding the costs of implementation, whether borne directly by Scotland, or clawed back by Whitehall. Marco Biagi’s suggestions seem fair, but really we have no actual numbers on this.
Whatever happens, on tax we are all taking stabs in the dark, and taking the whole thing on trust.
#17 by Steve on April 20, 2011 - 10:48 am
What I don’t understand is if Land Value Tax is fairer than a local income tax (which the greens seem to think it is), why would they use an increase to basic rate income tax to raise an extra £200 million when they could propose to raise the extra from their land value tax?
In my opinion the reason is that raising an extra £200 million would scupper their already very dubious claim that over 85% of people would be better off under their proposals. And because LVT is regressive, increasing it further would hit lower income families harder.
The greens’ approach to taxation reminds me a bit of the SNP’s desire to insist the LIT rate could be 3%. Again, this was all about making the case that a majority of people would be better off in order to avoid scaring the voters.
#18 by Doug Daniel on April 20, 2011 - 11:59 am
It confuses me when the Greens talk about using tax powers – what tax powers? Wasn’t the whole stooshie over SVR last year because SVR was not in a usable state, and would tax a significant amount of time and money to get into a working state? Also, as Marco has pointed out, the cost of implementation was supposed to rule out any raised revenue. I remember Alan Trench’s analysis showing that a even a 1% increase would be entirely cancelled out by implementation costs for the first year, and let’s also remember that the next Scotland Bill will make amendments to how Scotland can raise revenue. In short, it’s difficult to see what the point is in getting SVR implemented for just two years, only to raise an extra 0.5% income tax from people, and seems a bit like a token effort rather than a concerted attempt to raise money.
Also, Greens need to understand that roads are not a luxury. Buses don’t fly, and cars don’t stop spewing out fumes when they’re stuck in traffic. The AWPR is LONG overdue in Aberdeen, and anyone who disagrees clearly hasn’t had the misfortune of trying to get somewhere during rush hour in Aberdeen. The road system in Aberdeen is not fit for purpose in terms of public transportation, as anyone who has tried to get the number 2 bus in the morning can testify. Aberdeen could have the best buses in the world, and they would still sit there stuck behind cars due to all the traffic going through the city that should really be going around Aberdeen rather than through it.
It would be lovely for Aberdeen to be relatively free of cars, but that would require major roads being widened, extra bus routes (there are many journeys I just don’t even attempt by bus as they would require multiple changeovers) and even investment in extra rail links. Without all that, AWPR is a long overdue necessity in the North East – far more so than the completely needless GARL project Labour love so much.
#19 by Jeff on April 20, 2011 - 12:55 pm
“It confuses me when the Greens talk about using tax powers – what tax powers? ”
John Swinney himself has said that the SvR can be up and running again by 2013 and it is 2013 that the Greens are proposing to implement a 0.5p tartan tax.
The cost of getting this up and running from a value for money perspective is, of course, a fine point. It’s not clear what the figures are but it is a key factor.
#20 by Doug Daniel on April 20, 2011 - 7:18 pm
2013 is a long time away – who would have predicted the financial troubles of the past few years during the 2007 election? If the Scottish parliament had proper tax-varying powers that were available for use straight away, then I would be very much behind the Greens’ idea of raising taxes – but a proposal to vary a currently-unimplemented regressive tax by a meagre 0.5p in two years’ time just seems a bit pointless, especially if it’s true that administrative costs would equal the first year’s revenue increase. In fact, that article is working on the assumption that the tax was used to the full 3p, so raising it by a mere 0.5p could presumably cost MORE to administer than the revenue it generates. It supposedly raises £350 million per penny, so the administrative costs must be about £1.05 billion, and an increase of just 0.5p would presumably generate £175 million. In terms of the overall budget, £175 million is barely even loose change.
I just don’t see the point, especially since the Scotland Bill changes will come into action in 2015. It would be far better to concentrate on taxing big businesses and working towards full fiscal autonomy.